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Common Wealth Pension Services Inc.

2022-04-08 | Decision | Securities Act | Investment funds and structured products | https://www.osc.ca/en/securities-law/orders-rulings-decisions/common-wealth-pension-services-inc-0

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25(1)(a), 53, 74(1) and 144.


The Securities Commission has issued a decision regarding the exemption from dealer registration and prospectus requirements for capital accumulation plan (CAP) sponsors, portfolio managers, and mutual funds, including exchange-traded funds (ETFs), when trading mutual fund securities to tax-assisted and non-tax-assisted CAPs. The decision revokes and replaces a previous decision, expanding the definition of “Fund” to include ETFs.

Key points from the decision include:

1. The dealer registration requirements will not apply to the Filer or any Plan Sponsor of a CAP or Non-Tax Assisted CAP that uses the Filer’s services, subject to certain conditions.
2. The prospectus requirements will not apply to the distribution of securities of Funds to CAPs or Non-Tax Assisted CAPs sponsored by the Plan Sponsor, also subject to conditions.
3. The decision is based on the Filer’s representations, including that it provides non-discretionary advice and does not engage in discretionary decision-making for the Plans or Member accounts.
4. The decision includes conditions such as the Plan Sponsor selecting the Funds, providing Members with information about the Funds, and providing performance information and investment decision-making tools.
5. The decision also sets limits on contributions to Non-Tax Assisted CAPs, based on the difference between the maximum amount that could be contributed under the CAP and the maximum dollar limit provided in the Income Tax Act (Canada).
6. The decision will terminate upon the coming into force of a registration exemption or prospectus exemption for trades in a security of a mutual fund to a CAP, or 90 days after a notice indicating that no such rule will be made.

The decision is grounded in the Securities Act (Ontario) and is informed by National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions, Multilateral Instrument 11-102 Passport System, and National Instrument 81-102 Investment Funds.